Esmerian Files Chapter 11, Canceling Christie’s Sale

June 1, 2008byGary Roskin

Gem dealer Ralph Esmerian filed a bankruptcy petition on behalf of Fred Leighton, which he controls, stopping a scheduled Christie’s auction of his gems.

Just hours before the scheduled auction at Christie’s New York, Esmerian’s Fred Leighton Holding Inc. and seven affiliated companies filed for bankruptcy protection. The Chapter 11 petition lists between $100 million and $500 million in debts and liabilities and as many as 49 creditors.

The bankruptcy filing thwarted Merrill Lynch’s effort to force the auction of an estimated $34 million worth of antique jewelry held by the firm as collateral on the debt. The auction was to have included a $15 million pink diamond ring and a $6 million diamond-encrusted brooch once owned by the wife of Napoleon III.

Proceeds from the sale would have settled part of a $178 million loan made by Merrill Lynch to the jeweler, according to media reports. Esmerian, 68, told the New York Times the auction was a fire sale and the jewels would bring more money if they were sold privately.

Francois Curiel, director of Christie’s International Jewelry Department, announced the cancellation at 6:05 p.m. to about 100 collectors and dealers assembled at the Rockefeller Center auction house.

“After two days of court hearings, the sale of Rare Jewels and Gemstones could not take place, after a decision from the New York Bankruptcy Court,” said a statement from Christie’s. “We were obviously disappointed not to proceed with the auction but proud to have been selected as the auctioneers for this marvelous collection. Meanwhile, the traditional auction alone achieved $49.8 million, 88 percent sold by lot, 95 percent in value, with 10 top lots fetching above $1 million and a new benchmark reached for diamonds over 20 cts.”